Seasonality

Seasonality is a recurring and predictable pattern in the level of business activity over the course of a year. This pattern can be used to predict sales levels throughout the year, and so is incorporated into the annual budgeting process. When reviewing the results of a business, the analyst must take into account the impact of seasonality on reported results. As an example of seasonality, the retail trade experiences a major increase in sales prior to and during the winter holidays, followed by a slump earlier in the next calendar year.